Hall CA-NV, LLC v. Ladera Development LLC

Filing 115

ORDER - The Magistrate Judge's Order (ECF No. 111 ) is AFFIRMED. Signed by Judge Robert C. Jones on 3/2/2020. (Motions terminated: ECF No. 112 Objection/Appeal) (Copies have been distributed pursuant to the NEF - AB)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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HALL CA-NV, LLC, a Texas limited
liability company,

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Case No. 3:18-CV-00124-RCJ-WGC

Plaintiff,

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vs.

ORDER

LADERA DEVELOPMENT, LLC, a
Nevada limited liability company,
Defendant.

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Defendant Ladera Development, LLC objects to the Magistrate Judge’s Order (ECF No.

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111) quashing its subpoena seeking documents from counsel, Kolesar & Leatham (K&L), who

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had represented both Defendant and Plaintiff Hall CA-NV, LLC. Plaintiff asserts attorney client

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privilege over the documents, and Defendant counters that privilege is inapplicable because they

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were joint clients. The Magistrate Judge found they were not joint clients, and the Court affirms.

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LEGAL STANDARD

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When a party objects to a magistrate judge’s nondispositive order, “[t]he district judge . . .

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must consider timely objections and modify or set aside any part of the order that is clearly

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erroneous or is contrary to law.” Fed. R. Civ. P. 72(a); accord 28 U.S.C. § 636(b)(1)(A).
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The clearly erroneous standard is highly deferential and “plainly does not entitle a

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reviewing court to reverse the finding of the trier of fact simply because it is convinced that it

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would have decided the case differently.” Anderson v. City of Bessemer City, 470 U.S. 564, 573

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(1985). Consequently, a reviewing court will find the clearly erroneous standard to be met only

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when—despite evidence to support the finding—review of “the entire evidence” leaves a “definite

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and firm conviction that a mistake has been committed.” United States v. United States Gypsum

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Co., 333 U.S. 364, 395 (1948).
ANALYSIS

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To determine whether the Magistrate Judge’s Order is “clearly erroneous or contrary to

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law” requires a two-step inquiry: First, the Court must review the legal conclusions of the

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Magistrate Judge as to the applicable law. Second, the Court must review the Magistrate Judge’s

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application of that law to his factual findings.

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1. Applicable Law

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The parties agree that the Magistrate Judge correctly held that Nevada law applies in this

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case. The relevant Nevada statutes are NRS 49.095 and NRS 49.115. NRS 49.095 provides the

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general rule defining attorney-client privilege. NRS 49.115 provides exceptions to the general rule,

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including the exception “[a]s to a communication relevant to a matter of common interest between

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two or more clients if the communication was made by any of them to a lawyer retained or

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consulted in common, when offered in an action between any of the clients.” NRS 49.115(5).

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As the Magistrate Judge noted, the Nevada Supreme Court has never defined “retained or

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consulted in common.” Consequently, the Magistrate Judge correctly turned to persuasive

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authority to determine when other courts have found a joint representation. The most thorough

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analysis of the issue is a case from the Third Circuit, In re Teleglobe Communications Corp., 493

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F.3d 345 (3d Cir. 2007). However, as Teleglobe analyzed the issue in the context of in-house
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counsel’s responsibilities in a dispute between a corporate parent and subsidiary and the context

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in the instant case is that of completely separate individual entities with common counsel, this

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Court finds it more appropriate to begin with the Restatement upon which Teleglobe so heavily

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relies:

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Whether a client-lawyer relationship exists between each client and the
common lawyer is determined under [the principles of attorney-client relationship
formation], specifically whether they have expressly or impliedly agreed to
common representation in which confidential information will be shared. A coclient representation can begin with a joint approach to a lawyer or by agreement
after separate representations had begun. However, clients of the same lawyer who
share a common interest are not necessarily co-clients. Whether individuals have
jointly consulted a lawyer or have merely entered concurrent but separate
representations is determined by the understanding of the parties and the lawyer in
light of the circumstances . . . .
The scope of the co-client relationship is determined by the extent of the
legal matter of common interest . . . .
[I]n a subsequent proceeding in which former co-clients are adverse, one of
them may not invoke the attorney-client privilege against the other with respect to
communications involving either of them during the co-client relationship. That
rule applies whether or not the co-client's communication had been disclosed to the
other during the co-client representation, unless they had otherwise agreed.

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Restatement (Third) of the Law Governing Lawyers § 75 cmt. c–d (Am. Law. Inst. 2000)

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(emphasis added). Accordingly, the Court finds the applicable law as follows: NRS 49.115(5)

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applies where two or more now-adverse parties were previously in a joint-client relationship

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regarding a specific common interest. Hence, a court should find a joint-client relationship when

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the facts show that the parties explicitly or impliedly intended to enter such a relationship. This is

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precisely the reading of the law presented by the Magistrate Judge; therefore, all that remains is

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review of the Magistrate Judge’s application of the law.

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2. Magistrate Judge’s Findings

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The parties’ arguments can essentially be boiled down to two main contentions: Defendant

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argues that the inclusion of the “joint representation” language in the two conflict waivers

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explicitly defines the co-client relationship of Plaintiff and Defendant, and that any subsequent
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analysis of the parties’ conduct is in error. Plaintiff and K&L argue that, despite the “joint

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representation” language in the conflict waivers, the conduct of the parties demonstrates that no

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co-client relationship existed between Plaintiff and Defendant.

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Defendant notes that it “has found no case in which a Nevada court applied a ‘totality of

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the circumstances’ test to an explicit joint representation agreement,” and that the Magistrate

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Judge’s examination of the parties’ conduct was in error. (ECF No. 112 at 9:7–9.) However,

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Defendant has not presented the Court with a joint representation agreement, it has only pointed

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to the two conflict of waiver letters. Admittedly, the initial conflict waiver letter explicitly uses the

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phrase “joint representation” to describe the proposed relationship, (see ECF No. 43 Ex. 1 at 2

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(“The purpose of this letter is to describe the proposed joint representation of Hall CA-NV, LLC

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and Ladera Development, LLC . . . .”)), and the second letter affirms this description. (See ECF

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No. 43 Ex. 2 at 2 (“Hall CA-NV, LLC and Ladera Development, LLC consented to joint

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representation by K&L . . . .”).) Furthermore, in K&L’s letter responding to the initial subpoena

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to Ms. Wood, the letter included the phrase “[d]ue to the joint representation.” (ECF No. 42 Ex. 3

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at 3.) 1 Nonetheless, this Court cannot say the Magistrate Judge’s determination that the letters did

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not constitute a formal joint representation agreement was clearly erroneous. See Anderson, 470

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U.S. at 574 (“Where there are two permissible views of the evidence, the factfinder’s choice

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between them cannot be clearly erroneous.”) (emphasis added). Accordingly, the Court affirms

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the finding that there was no explicit co-client relationship and further analysis to determine

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whether there was an implied co-client relationship was proper.

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As noted above, “review of factual findings under the clearly-erroneous standard—with its

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deference to the trier of fact—is the rule, not the exception.” Id. at 575. Review of the entire

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However, the letter also discussed the firm’s screening procures, which cuts against joint
representation.
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evidence reveals two competing narratives: Defendant argues that its understanding,

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contemporaneous with the representation, was that the relationship was a joint-client relationship

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and that materials were unprivileged between K&L, Plaintiff, and Defendant. (See, e.g., ECF No.

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98 Ex. 1 at ¶¶ 9–14.) Plaintiff and K&L argue that their understanding, contemporaneous with the

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representation, was that it was concurrent but separate. (See, e.g., ECF No. 92 Ex. 4 at ¶¶ 17–19;

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ECF No. 92 Ex. 5 at ¶¶ 17–19; ECF No. 97 Ex. 2 at ¶¶ 8–9; in camera Ex. A.) Here, the Magistrate

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Judge found credibility in the declarations of K&L and Plaintiff and found the declaration by Mr.

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Pickett of Defendant to be “contradicted by his deposition testimony.” (ECF No. 111 at 23:17–

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25:20.) Along with other evidence, this was sufficient for the Magistrate Judge to find that “the

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representation of Hall and Ladera was concurrent but separate.” (ECF No. 111 at 26:9–12.) Review

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of the record does not demonstrate that this finding is clearly erroneous or contrary to law.

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Accordingly, the Court affirms the Magistrate Judge’s Order.
CONCLUSION

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IT IS HEREBY ORDERED that the Magistrate Judge’s Order (ECF No. 111) is
AFFIRMED.

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IT IS SO ORDERED.

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Dated this 2nd day of March, 2020.

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_____________________________________
ROBERT C. JONES
United States District Judge

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